Part II : ” It’s different this time …….Time will only prove it !!

There is a memorable dialogue of Rajesh Khanna , our Late superstar of bollywood , from the Movie ” Anand” . It goes like

“Babu moshai zindagi aur maut uparwale ke hath hai jahapana, jise na aap badal sakte hain na main. Hum sab to rangmanch ki kathputliyan hain jiski dor us upar wale ke haathon main hai. Kab, kaun kahan uthega ye koi nahin janta.”

Phir hume aisa kyon lagta hai ki “risk” sirf market mein rehta hai .

Technically , one can say that volatility in the market can be called as Risk . However , the biggest risk of equity investing is not investing into it . Nevertheless , such volatility has always given opportunity to add values to investors portfolio .

If you go deeper into the returns of equity & how it comes , then one can conclude that equity returns doesn’t come from the market . Market ( be it Sensex / Nifty ) is just the number to compare the effects of movements . In reality , return comes from the earnings of the company and its stock price follows earning in the long term . Stock price may not replicate its earning in short term due to sentiments , political events , global events etc .  Therefore , the focus should always be on the company’s earning and not on the market movement . We believe that indian companies will keep making decent earnings in coming decades .

One has to understand that there are around 196 countries in the world . So naturally , there will be something happening somewhere which will impact someone .

On July 24 , 2012 ,we wrote the article ” It’s different this time …….Time will only prove it !!!!!”  when market was going through turbulent time (but the reason was different that time )and how we, as a country , was doing  ?

Let’s analyse India 2015 Vs then 

When US announced Feb tapering in 2013 , our currency collapsed and hence the market .  That time , we were struggling with the high twin deficits , high inflation , low forex reserves , political scams , lower GDP growth .

However , things are different now with having stable government .

2013 ( Then ) 2015 ( Now )
CPI > 10% < 5%
WPI > 6 % < 0% (negative from last 6 months)
Current Account Deficit > 4% of GDP < 1.5% of GDP
Fiscal Deficit > 4.5 % of GDP < 3.9 % of GDP
Crude Oil > $ 100 per barrel < $ 50 per barrel

Let’s look at India Vs World 2015

Short Term Global India
Interest Rate Rising Falling
Growth Subdued Rising
Reform Momentum Muted Improving
Financial Stability Weak Strong
Long Term Global India
Demographics Unfavourable Favourable
Savings Falling Rising
Growth Subdued Strong
Productivity Falling Rising

We , at Pentagraph ,strongly believe that Indian economy will ONLY improve in coming years considering above parameters.

Let the Chinese dragon breathe fire , but we will keep saying ” It’s different this time …….Time will only prove it !!

Happy Investing 

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